On the eve of the Thanksgiving holiday, the Federal Housing Finance Agency (FHFA) announced that the maximum conforming loan limits for single-family mortgages acquired by Fannie Mae and Freddie Mac in 2017 will increase to $424,100 from $417,000 in most of the country. This will be the first increase in the baseline loan limit since 2006.
The decision was based on the recovery of housing prices under the Housing and Economic Recovery Act of 2008 (HERA). Until this year, the average U.S. home price remained below the level achieved in the third quarter of 2007 and thus the baseline loan limit had not been increased.
FHFA third quarter 2016 House Price Index (HPI) reported that homes nationwide were worth roughly 1.7% more than the value for the third quarter of 2007, and thus the baseline loan limit will increase by that percentage.
In areas where 115% of the local median home value exceeds the baseline loan limit, the maximum area loan limit will be higher. This year, median home values generally rose in high-cost areas. Because the baseline loan limit will be higher in 2017, the new ceiling limit will also be higher. The new ceiling loan limit, which applies in areas with the most expensive homes, will be $636,150 (150% of $424,100) for one-unit properties in the contiguous U.S.
Special statutory provisions establish different loan limit calculations for Alaska, Hawaii, Guam and the U.S. Virgin Islands. In these areas, the baseline loan limit will be $636,150 for one-unit properties, but actual loan limits may be higher in some specific locations.
As a result of generally rising home values, the increase in baseline loan limit, and the rise in the ceiling loan limit, the maximum loan limit rose in all but 87 counties (or county equivalents) in the country.
A list of the 2017 maximum conforming loan limits for all counties and county-equivalent areas in the country can be found here. A map showing the maximum loan limits across the country can be found here.